Theory and concepts of creating a financial model Essay

Theory and concepts of creating a financial model - Essay Example Management should be skeptical of the model assumptions that will be related to the recommendation. There are different types of financial models that are used for various purposes. For example, a cash flow model is regarded as a powerful tool that can assist a financial team with project future performance in a business venture by evaluating the effect of that type transaction such as an an acquisition and LBO(Shim 2007, 67)2. It is also able to calculate returns and perform ration analysis. Financial models for investment options or product services are often custom developed in excel sheets as they take into account for unique characteristics such as cost structure, product market and competitive situation. The following guidelines should be used: Outline the model the type of model structure that would include the general output and the key components.The weight cost and the advantages of the type of model will also be factored in. The forecasting future method should be used in any financial model (Fernholz 2002, 56). When constructing a cash flow model there are a number assumptions that must be included. In this kind of financial model, there is a deterministic approach that uses certain simplifications.Among them is the investment of return that is known and does not usually vary from year to year. Another important aspect is that this rate is the same rate that will be used to discount the reserves and the third aspect is that the ultimate loss ration will be accurately predicted. There are some concepts that one has to know when creating a financial model like a cash flow model. Firstly, you have to have to start with the in mind- This will be inclusive of whether you are pricing options of an investment or building3. With the Cash flow model, you should be able to check for assumptions. From this you would be able to get truthfully generate outputs with a certain number of inputs. This kind of model should be one that you are able to adjust automatic ally and should be dynamic depending on your inputs. This model does not give room for a formula, like for instance, that will multiply a specific number of units with the determined price (Hambrook 2003, 95). This gives room in case the price might change in future. If you use a fixed formula and the prices change in the future, you will be forced to go the right cell of the Excel sheet and make changes every time the price changes. One of the major concerns that most investors have is determining the relationship between the risk and the return of a financial asset. This kind of information can be obtained in his portfolio. It is general knowledge that there is a good relationship between the risk and the expected return of a financial asset. In other words, when the risk of an asset increases, so does its expected return. What this means is that if an investor is taking on a big risk, he is expected to be compensated for doing so with a higher return of sales in the futures. Simi larly, if the investor wants to boost or increase the the expected return of the investment, he needs to be prepared to take on more risk. This is the reason why a portfolio is used to give this important relationship. It is important to note that the concept of Modern Portfolio Theory to show the connection between the risk and return of a portfolio of financial assets. The three types of portfolios that will help us

Language and ethnicity -Ethnic related speech mitigation and PDI Essay

Language and ethnicity -Ethnic related speech mitigation and PDI effect - Essay Example This paper will also examine the concept of Power Distance Index, and how it affects speech. In addition to this, this paper will explain the difference between high PDI and low PDI countries. This paper will further analyze the success rate based on the PDI of the community. The idea of speech code came about as a result of the coding principle by Basil Bernstein and the programmatic approach that Hymes adopted to communication. The combination of the two concepts saw to the development of the concept that speech code is. Basil Bernstein, a British psychologist, noted that different social classes or social differences can exist within one society. While these differences include language features, they also entail coding principles, which dictate communicative conduct. Coding principle, according to Bernstein, refers to the rule that governs what to say, and depending on the context, how to say it (Sadovnik, 2001). Method According to Bernstein’s theory on coding principle, speakers are directed to rely on shared context of communication, other than only the verbal communication. When this happens, the speaker can communicate more effectively since they are aware that in addition to their words, the signals, and non-verbal cues they use also dictate the meaning they send forth. The coding principles used vary according to the socioeconomic differences of the people involved. Even though, a community shares a similar language, different socioeconomic groups value different ways of communicating; in other words, the coding principle. In his theory, Bernstein claimed that the use, and value placed on the coding of language, is influenced by the socioeconomic conditions (Philipsen, 2007). Three coding principles are usually used in linguistics, and these are informativity, rigidity, and attenuation. Using these three principles, the same set of words may have different meanings to different groups of persons. The structure and interaction patterns that cha racterize a family influence the way the members in focus express themselves. The use of language, and the way it is coded is also sensitive to the social organization of the society, and the correlative differences in the family (Sharifian, 2007). Judith Orasanu and Ute Fischer carried out a study on â€Å"Cultural Diversity and Crew Communication.† This study carried out in 1999 involved dialogue between an aircraft officer, and his first officer. In their study, they established that nationality played an important role in influencing communication. This is evident when the modes of communication of different communities are put into consideration. Communication in Korean and Japanese communities is accentuated with symbols, facial expressions, and other gestures. These are aspects of receiver oriented speech. The main focus is on getting information across to the recipient of the information. In contrast to this, there is transmitter oriented speech. Here, the speaker aim s to get out his point without being overly concerned with whether or not the recipient gets the intended information. This is characteristic with Danish, or Swedish communication. The source of information basically uses communication aspects he feels will get his message out in the best way possible. Focus is on getting the message out, and not across. Performance Distance Index (PDI) A society that records a